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Shares of ATV manufacturer Polaris Industries Inc. (NYSE: PII) jumped 54.2%, according to data from S&P Global Market Intelligence, as the company began to recover from a recall filled 2016. Operations haven't gone back to pre-recall days, but there was enough momentum for investors to bet on the stock again.
Third-quarter results were an example of how the year went for Polaris. Off-road and snowmobile segment sales were up 12% to $1.0 billion, showing customers once again purchasing vehicles like RZR and the Ranger 4x4s. Global adjacent market sales were also up 17% to a more modest $91.6 million.
Polaris also began to consolidate its motorcycle business in 2017, shutting down the Victory brand and doubling down on the Indian brand. Long term, having one brand will reduce operating expenses in the motorcycle segment and the Victory brand had become overshadowed by Indian for quite some time.
The acquisition of Transamerican Auto Parts has also driven tremendous growth in the aftermarket business. Third-quarter sales were up 653% to $224.7 million, and gross profit for the segment was an impressive $63.2 million. Long term, the business will help diversify Polaris' business and provide more scale for the business overall.
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Polaris isn't completely out of the woods, having experienced some recalls in 2017. But the worst of the recall pain appears to be behind the company, and operations are beginning to turn around as a result. If there aren't any unforeseen setbacks from recalls in 2018 the stock's recovery could continue. Especially if the Indian brand continues to grow in popularity, driving growth in the motorcycle segment.
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